California median housing price increases by most in 33 years

The median price of a previously owned house in California soared 31.9 percent in May, the largest year-over-year increase in more than three decades as sales of more expensive properties increased and inventory remained tight, a trade group said Monday.

Last month, the state's median home price increased to $417,350 from $316,460 in May 2012, according to Los Angeles-based California Association of Realtors.

The association reported that the year-over-year price increase is the biggest since February 1980, when it rose 29.1 percent to $94,4890 from $75,520 a year earlier.

In the Los Angeles metro area, the median price rose 31.12 percent to $379,640 in May from $289,280 in May 2012. The Los Angeles County-wide median rose 29.4 percent to $365,990 from $282,930. And the Inland Empire median increased 32 percent to $238,240 from $180,530.

The price increase is mostly driven by fewer sales of distressed properties and an uptick in transactions involving more expensive homes.

"That's been pretty sharp," said Leslie Appleton-Young, the association's vice president and chief economist, of recent price spikes. "We've had a big drop off in distressed property sales and with the price appreciation you have home sellers coming off the fence and listing (homes). Demand is incredibility strong."

Last month's price increases recall the boom days before the market collapse in the Great Recession.

"While home prices are increasing at levels above those observed in 2006-2007, the fundamentals of the housing market are much more solid than what we experienced a few years ago," Appleton-Young said.

Home buyers now are making larger down payments and many are using more stable loan products, she said.

Also, low interest rates are helping affordability and the mix of homes being sold is also changing.

Last month, homes costing $500,000 or more accounted for 35.4 percent of sales, up from 24.6 percent a year ago, Appleton-Young said.

Home sales also fell 3.6 percent this past May from a year earlier in the state to an annualized rate of 431,370 units, according to the association. Sales rose 1.9 percent from April.

May's sales estimate is how many transactions would happen all year if the market moves at last month's pace.

Los Angeles County sales fell an annual 2.2 percent but rose 14 percent from April. And in the Inland Empire, sales fell 13.3 percent from a year earlier and rose 6 percent from April.

In May, there was a 2.6 month supply listings at the current sales rate, down from 3.6 percent a year ago. A six-to-seven-month inventory represents a balanced market, according to the association.

The Realtor's report is similar in tone to one last week from market tracker DataQuick that said buyers flooded the Southern California market with a record $4.65 billion in cash in May while the median price rose 24.7 percent to $368,000. The price differs in the two reports because DataQuick includes new and lived-in houses as well as condominiums, and the Realtors just track a resale home.

"The trajectory is the same," DataQuick analyst Andrew LePage said of the current price environment. "With rising consumer confidence and incomes people are moving up again and higher quality homes are selling."